IFC Report Estimates Investors Appetite for Impact Investing Could Be as High as $26 Trillion

Washington, D.C., April 8, 2019—Investors’
appetite for impact investing—in which they seek to generate positive
impact for society alongside strong financial returns—could be as much
as $26 trillion, according to a new report issued by IFC, a member of the
World Bank Group.
The report, Creating Impact: The Promise of Impact Investing, is
the most comprehensive assessment so far of the potential global market
for impact investing. As much as $268 trillion—the financial assets held
by institutions and households across the world—is potentially available
for investment. The report notes that if just 10 percent of this were channeled
toward investments focused on improving social and environmental outcomes,
it would go a long way toward providing the funding necessary to achieve
the Sustainable Development Goals while also facilitating a shift to a
low-carbon future.
The growing demand for impact investing partly reflects demographic shifts.
According to Accenture, in North America alone, at least $30 trillion in
wealth will be transferred in the coming decades from Baby Boomers to Generation
X and millennials. Younger investors increasingly favor socially and environmentally
motivated investment strategies—and they’re willing to invest larger
amounts in them.
“More and more investors – including younger people – are demanding
that their investments are channeled into funds that have positive impact
for communities and the environment,” said IFC CEO Philippe Le Houérou.
“We have a historic opportunity to grow this market -- and that’s good
news for the planet and the communities around the world.”
In public markets involving stocks and bonds, the report estimates that
investor appetite could be as much as $21 trillion. An additional $5 trillion
could come from private equity, nonsovereign debt, and venture capital.
Turning this appetite into actual investments will depend on the creation
of investment opportunities and investment vehicles that enable investors
to pursue impact and financial returns in ways that are sustainable.
IFC is the one of the oldest and the largest impact investors—demonstrating
that it’s possible to achieve significant development impact while generating
solid financial returns. On average, IFC’s realized equity returns outperformed
the MSCI Emerging Market Index from 1988 through 2016.

Throughout its history, IFC has sought to
mobilize like-minded investors to collaborate in ways that can change the
landscape of investing. In 2003, it helped international banks establish
the Equator Principles, which have become the most tested and applied global
benchmark for sustainable project finance in emerging markets. More recently,
IFC – in close collaboration with other financial institutions - introduced
a set of Operating Principles for Impact Management—a market standard
that could help achieve the same discipline and transparency for impact
investing that the Equator Principles did for project finance.

About IFC
IFC—a sister organization of the World Bank and member of the World Bank
Group—is the largest global development institution focused on the private
sector in emerging markets. We work with more than 2,000 businesses worldwide,
using our capital, expertise, and influence to create markets and opportunities
in the toughest areas of the world. In fiscal year 2018, we delivered more
than $23 billion in long-term financing for developing countries, leveraging
the power of the private sector to end extreme poverty and boost shared
prosperity. For more information, visit www.ifc.org
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